'A Bad Signal': Fracking Opponents Have Policy Indicators in Their Corner

As fracking opponents descend upon Capitol Hill this weekend demanding an end to the shale drilling technique, they won’t have a White House contingent there to pledge solidarity with the environmentalist crowd.


But a unilateral policy move this past spring, quickly dialed back after outcry from lawmakers and property owners, indicates that the silent support from the administration may be stronger than anti-frackers believe.

In March, the U.S. Department of Agriculture pursued, then quickly backtracked on, a plan to require extensive environmental reviews on property with oil and gas drilling leases before issuing mortgages. Tens of thousands of rural and low-income families rely on the loans, which reached $18 billion last year, and 15,000 rural businesses were aided by more than $1 billion in Rural Business and Cooperative funds.

The first notices that property owners with production on their land would have to go through the National Environmental Policy Act came from the USDA’s New York office. “We will no longer be financing homes with gas leases,” Jennifer Jackson, program director for rural loans in the Agriculture Department’s New York office and career USDA employee, wrote in an internal e-mail in March.

New York has been a base of the anti-fracking movement, with celebrity property owners such as Mark Ruffalo, who’s coming to Saturday’s Stop the Frack Attack rally, complaining of drilling near their upstate homes.

“By this one state starting to do this on their own, that was a bad signal,” Rep. Dan Boren (D-Okla.) told PJM.

“Oklahoma, we’ve been producing oil and gas for decades. I mean, going back even to when we were Indian territory we’ve had some kind of energy production,” Boren continued. “So we’re very used to having tank batteries or a pumpjack or something like that on property. The oil and gas industry is regulated by the state, by the Corporation Commission; we have this thing called Oklahoma Energy Resources Board so if there’s an old abandoned site they go and clean it up.”


“The industry works well with the landowners; everyone works well together,” he said. “Now in these new areas where you’re having all this shale production like New York, Pennsylvania, other places, it’s still new to them and so I think the reason why you’re seeing these types of things happening is because they just don’t understand. They don’t have the culture and the tradition of working with the oil and gas industry.”

Boren was alarmed when he read the March story in the New York Times about the plan to dial back the categorical exclusion that exempted the rural loans from the environmental reviews. “Immediately a red flag went up,” the congressman said, and he fired off a letter to Agriculture Secretary Tom Vilsack the next day.

“That could have a terrible impact on Oklahoma,” he said. “I thought, we’ve got to stop this before it begins.”

“I understand the need to protect our environment and our natural resources, however a change in procedure would greatly discriminate against families and businesses located in areas of our country that are rich in oil and gas,” Boren wrote to Vilsack. “Many loan recipients are already struggling to make ends meet and taking away this loan option would only discourage economic development in rural communities like the many located in my eastern Oklahoma district.”

Boren also stressed the detrimental effect that such a move would have on energy independence as owners are forced to choose between a house or maintaining mineral leases.


“Fracking is not new,” he said in his conversation with PJM a month after Vilsack changed course, adding that it’s “impossible” for contaminants from hydraulic fracturing to get into the water supply.

“Some people are using where a well may have been drilled improperly or something like that — not the technique of fracking, but something may have happened, a hole or casing they’re using; these are very isolated incidents — and they’re saying, ‘Well, this is because of fracking,’ but actually it has nothing to do with fracking,” Boren added.

Other Democrats in Congress have protested otherwise. Rep. Ed Markey (D-Mass.) asked the White House Council on Environmental Quality to subject all federal lending programs to environmental review. Last fall, Markey asked Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, and the Department of Veterans Affairs for information regarding the inclusion of risk from natural gas extraction on government-sponsored mortgages.

“The dangerous chemicals used by some drilling companies and the radioactive elements that are sometimes unearthed in natural gas extraction means some of these mortgages could become literal ‘toxic assets’ for owners, borrowers, and even taxpayers,” said Markey, ranking member of the Natural Resources Committee and a senior member of the Energy and Commerce Committee.

Josh Fox, director of Gasland and one of the speakers at Saturday’s anti-fracking rally, said in the wake of Vilsack’s decision to forego the NEPA reviews that “USDA staff experts in the NY office as well as in DC made clear in emails that the law and the science require that mortgages with drilling leases shouldn’t be exempt from NEPA.”


“Exempting rural housing loans from NEPA means that gas drilling leases will also be exempt from legal recourse and other basic public interest protections the law was meant to provide,” Fox said. “It also means that when property values drop precipitously due to contamination from gas drilling, sometimes to as low as 10 percent of their original value as we’ve seen in Pennsylvania, the American taxpayer is going to be left holding the bag.”

The Stop the Frack Attack movement has vowed to “make a special delivery to the American Petroleum Institute and American Natural Gas Alliance” during its D.C. march: “They say fracking is good for our water, we say nay and have the water to prove it!”

The event will begin with a “Multireligious Service for the Earth and Its People.”

Yet while environmental groups balked over the Vilsack backtrack, Boren knows that there’s definitely room for a shift back in the original direction of requiring environmental reviews — especially when the USDA has promised to revisit the decision next year, after the election.

“I don’t, frankly,” Boren, who is not running for re-election, replied when asked whether he trusts the Obama administration to keep rural landowners insulated from the environmental reviews. “Let’s say the administration stays in place; we need to make sure there’s a lot of oversight over USDA both in the House and Senate to make sure they don’t do something like this.”


The USDA told PJM today that there has been no change in policy since the March memo to state directors that affirmed the loans’ exclusion from NEPA reviews.

That directive, however, expires April 30, 2013.

Add that to the Interior Department heaping new regulations on federal-land fracking, air-quality regulations, and the “threat of the EPA taking over fracking — we’ve got a lot of state-based regulation that’s doing fine,” Boren said.

“When the president comes out and says ‘oh, we’ve increased production,’ that’s only in spite of the administration’s policies,” Boren said, noting the increase is on private land while production slows due to “very detrimental” policy on federal lands.

He credits President Obama’s warmer public attitude toward the Keystone XL pipeline project and subsequent spring speech in Cushing, Okla., where the president embraced the southern portion of the pipeline, to polling data suggesting “this is the one vulnerable area for the president.”

“I don’t know who gave that advice to come to Oklahoma and say, ‘yes, we’re for the southern half,'” Boren said. “To me, that’s just showing a weakness. Most people are smart enough to know that this pipeline is not just a half of a pipeline; it’s a whole pipeline and we’ve got to have the whole thing connected to bring that oil.”

Congressional energy advocates noted yesterday that there’s a fresh urgency in approving the cross-border section of Keystone that runs from Canada to Cushing after China moved in on our northern neighbor’s energy resources.


“China’s purchase of a Canadian energy producer is a big, big wake-up call, especially while the administration continues to stall our plan to approve the Keystone XL pipeline,” said Sen. David Vitter (R-La.). “China – the world’s second biggest economy– recognizes Canada’s energy resource potential, and they are making moves to get it. Completing the Keystone XL pipeline makes economic and security sense for the U.S. because it would bring enough supply from Canada to offset six percent of total U.S. daily oil imports – or the amount imported from Oman, Chad, Algeria and Iraq combined.”

Energy further takes the spotlight on Capitol Hill this week as Interior officials appear before the House Natural Resources Committee tomorrow to answer questions about Obama’s Gulf drilling moratorium and as the House prepares to vote on a bill to replace Obama’s five-year offshore drilling plan to allow for more generous lease sales.

The White House threatened yesterday to veto the bill.

In addition to bucking the plan that “incorporates lessons learned from the Deepwater Horizon oil spill,” said the Office of Management and Budget in its statement of administration policy, “the bill also would establish unworkable deadlines and substantive and procedural limitations on important environmental review and other analysis that is critical to complying with laws, including the National Environmental Policy Act, the Endangered Species Act, the National Historic Preservation Act, and the Clean Water Act.”


“Full compliance with these laws is important for the protection of citizens, communities, and the environment and is necessary in order to avoid costly and time-consuming litigation,” said the OMB.


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